PayPal Sues Google Wallet Executives over Trade Secrets

Google executives are being sued by PayPal for taking trade secrets from their former company and using them to build the new Android-based Google Wallet mobile payment service.

eBay's (NASDAQ:EBAY) PayPal payment service has sued Google (NASDAQ:GOOG), accusing the
search engine of poaching trade secrets it then used to hone its mobile payment
service.

The suit, filed in Santa Clara County Superior Court just
hours after Google unveiled its Google Wallet service, alleges that two key
executives who created the Wallet service used company secrets about mobile
payments to fashion Google's own service.

Unveiled at a press event in New York, Google Wallet lets consumers pay for products by tapping their Android-based smartphones
against a special sale terminal.
Named in the suit are Osama Bedier, vice president of payments,
and Stephanie Tilenius, vice president of commerce for the company. Both held
similar positions at PayPal before joining Google.
Google hired Tilenius in February 2010. Tilenius is named
in the suit because she broke a non-compete agreement with PayPal by persuading
Bedier to join Google in January of this year, after which the search engine
accelerated its mobile payment plans.
However, it is Bedier who faces the more unsavory charges.
PayPal alleges that Google in 2010 had been working on brokering
a deal to have the payment provider enable payments on Android phones. Instead,
it turned around and hired Bedier, who had been negotiating the deal for
PayPal.
The payment provider further alleges Bedier kept records
of all of PayPal's future plans for mobile payments on a non-PayPal computer,
and used that info to build Google Wallet after joining the company.
Bedier used the PayPal's trade secrets for mobile
payments to pitch many of the same major retailers with whom PayPal was seeking
to partner for its own mobile payment service. Google Wallet partners include
Macy's, American Eagle, RadioShack and a dozen other major companies.
"Bedier's comparisons incorporate PayPal trade
secrets, including PayPal's schedule for deployment, anticipated features, and
back-end approach to mobile payment, point of sale, and the benefits of a
wallet in the cloud," according to the
lawsuit.
The suit also alleges that Bedier recruited some of his former
colleagues from PayPal to join Google.
"We spend a lot of time and energy creating the
things that make PayPal unique and a preferred way to pay for almost 100
million people around the world," said Amanda Pires, senior director for
PayPal global communications, in a brief note about the suit. "We treat
PayPal's 'secrets' seriously, and take it personally when someone
else doesn't."
Google, meanwhile, said the company had not yet received a
copy of the complaint and would not be able to comment until it has had a chance to
review it.
PayPal makes a compelling argument in its lawsuit. Google may find itself paying the company a healthy settlement fee to extricate itself from the legal matter.